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Office of the Controller
PO Box 1510
Pembroke, NC 28372

Bursar: 910.521.6855
Payroll: 910.775.4349
Relay: 910.521.6471

Location: Lumbee Hall, Room 311
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general information

In the past there has been much discussion and a lot of confusion about payments being paid to nonresident aliens entering the U.S. using a B-1 or B-2 visa. The following information is given so that users of this guide may have some basic insight as to problems they may have had in the past and to understand that changes are being made to assist in payments of honoraria and travel related expenses to nonresident aliens. In October 1998, the American Competitiveness and Workforce Improvement Act was signed into law making it possible to pay honoraria and travel expense to foreign visitors entering the U.S. using a B-1 or B-2 visa. The following quotes are taken from the 1999 Edition of Nonresident Alien Tax Compliance : A Guide for Institutions Making Payments to Foreign Students, Scholars, Employees, and Other International Visitors.

Payments Made to Business Visitors ("B-1" Visaholders) And Tourists ("B-2" Visaholders)

"There has been much debate about what amounts may be paid to a foreign guest lecturer for his services. This is an especially troublesome problem when the individual entered the U.S. as either a business visitor on a B-1 visa or as a tourist on a B-2 visa. The INS policy has been that persons entering the U.S. in either B-1 or B-2 status are not permitted to receive compensation (e.g., an honorarium or other payment) for services rendered. A B-1 business visitor may receive payment for incidental expenses, which includes reimbursement for accommodation, meals, and travel expense. A B-2 tourist may not receive any payments, including reimbursement for incidental or travel expenses. These positions of the INS with respect to B-1 and B-2 visaholders are set forth in proposed INS regulations.

In the past, the INS had suggested that the best way to avoid this "incidental expense" and "honorarium" dilemma is to ensure that guest lecturers enter the U.S. as J-1 short-term scholars. The short-term scholar category is a relatively new category, consisting of scholars coming to the U.S. for a period of up to four months to lecture, observe, consult, or participate in seminars, workshops, conferences, study tours, professional meetings, or similar types of educational and professional activities. These scholars are permitted to receive direct compensation (e.g., an honorarium or other payment) and payment or reimbursement of incidental or travel expenses from the sponsoring entity. The key to the use of the short-term scholar category is to identify the scholar and the appropriate J-1 status before the individual enters the U.S. and the service is rendered. This will entail greater coordination of institution officials responsible for inviting guest lecturers and the institution office responsible for issuing visa documentation."

"Clearly, these rules and policies ran counter to the normal practices of the academic world, where honoraria are paid to guest lecturers and high profile researchers to attract them to give speeches, conduct workshops or participate in seminars, thereby enhancing the reputation of the institution. At the urging of the academic institutions and groups representing foreign scholars, Congress has now overturned these confusing rules. Section 431 of the American Competitiveness and Workforce Improvement Act specifies that any alien admitted under section 101(a)(15)(B) of the Immigration and Nationality Act may accept an honorarium payment and associated incidental expenses for "usual academic activity" lasting no more than nine days at any single institution, if the payment is offered by the institution for services conducted for the benefit of the institution. The foreign national may accept such payment only if he or she has not accepted such payment or expenses from more than five institutions during the previous six months.

Although the new provision is effective as of the date of enactment of the law, it raises some interesting questions that may have to be addressed with implementing regulations. As a preliminary matter, it would seem that the new provision allows payments to be made to visitors for business (B-1 visaholders) and visitors for pleasure (B-2 visaholders) alike. This would allow a visiting professor to combine a lecture with a pleasure trip, and use a B-2 visa without foregoing an honorarium and payment for expenses. Since the statutory language is inclusive of both categories, it is doubtful that the INS will be able to narrow this regulation."

Updated: Tuesday, December 10, 2013

Return to Foreign Visitor Tax Guide

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PO Box 1510 Pembroke, NC 28372-1510 • 910.521.6000